Tips to Buying Property in Abu Dhabi (UAE)

Tips to Buying Property in Abu Dhabi (UAE)

buyer-guide-final_abu-dhabi.jpgApproached from the sea Abu Dhabi’s densely packed high rise buildings give the impression that can grow no further but the reality is that planned expansion will increase the city’s area and population (currently about 1.8m) over the next few years.

Where to Look

The modern city of Abu Dhabi only dates back to the sixties and it is still a city trying to establish and nurture its character and create differentiation between neighbourhoods. The town plan on Abu Dhabi island conforms to a grid pattern with very high density building (20 storeys is normal) along the shoreline (The Corniche). New developments on other islands, some of them man-made, and the mainland are making great efforts to distinguish themselves with cultural features (Saadiyat Island’s Guggenheim Museum) or resort style attractions as with Reem Island or Al Raha beach. However, in several cases these developments are only at the planning stage, all-be-it far advanced.

The inland oasis city of Al Ain compares well with Abu Dhabi city in visual terms with a pleasanter climate as well. This is a low-rise city with no buildings over six storeys, emphasising the greenness of the town which is adjacent to springs at the foot of Jebel Hafeet. Properties can be distinctly palatial but it will be years before expatriates are able to invest (see below).

Snags, Points to Remember, Legal & Otherwise

Abu Dhabi seems to need re-thinking; building density is too high and there’s too much traffic. With a high temperatures and high humidity from April to September, it needs environmental improvements to make it a more attractive place to live. Given the proximity of some of the island developments – Saadiyat is only 0.5km from the city centre – these would appear to be an obvious choice of location when they are completed over the next few years. Currently, Abu Dhabi is a landlord’s paradise with a severe shortage of rentable accommodation but the situation should ease once new developments become available.

Abu Dhabi has poor public transport and no mass transit system.

Non Gulf Cooperation Council nationals are restricted to purchasing 99-year leases in designated ‘Investment Areas’ but this is a significant recent liberalisation, enacted in 2005. The designated areas so far announced are the three development areas mentioned above (viz. Al Reem, Saadiyat Island and Al Raha Beach). So far there is only a primary market for foreigners so all purchases will be from developers and ‘off-plan’. This means that choosing an estate agency with good connections with developers is a vital first step in the process. Properties are secured with a 10% down payment. Service charges are payable annually in advance.

Mortgages are obtainable up to at least 90% of the property’s value.

The future opportunities for expatriate investors seem obscure at present but the likelihood is that restrictions will ease with neighbourhoods with lower density housing becoming available for investment, if only on a long-lease basis. For the next five years or so it may be wise to assume that Dubai will be the trendsetter in UAE property and changes in that market will ripple out to Abu Dhabi.

Returning to the subject of Al Ain; the frontier with Oman is next to the town and the Omani town of Buraimi is very close. Oman’s attitude to expatriate property investors is also slightly obscure but may be ahead of Abu Dhabi’s so maybe Buraimi is the solution.

Property Taxes

Abu Dhabi does not (currently) levy corporation tax or income tax and there are no restrictions on the repatriation of capital. There are registration fees of 2% for property sales and 1% for leases. Ownership of property does not establish a right of permanent residence though tourist visas are easily obtained.

What to Read

Explorer publish “Abu Dhabi Explorer: The Complete Residents’ Guide (Living & Working for Expats)” and “Abu Dhabi Explorer (Residents’ Guide)“. I suspect that “Property Investment Guide: UAE and Dubai” won’t have enough about Abu Dhabi to justify the outlay but comments from anyone who knows better would be welcome.